Category Business & Strategic Planning

August 21, 2023 by Jenifer Bartman

MEDIA: CBC News Network Weekend Business Panel (August, 2023)

Joining the CBC News Network Weekend Business Panel during difficult times for many, as forest fires burn in the Yellowknife and Kelowna areas, among others, alongside Rubina Ahmed-Haq and Natalie Katalata. Our discussion focused on what households and businesses can do when a crisis such as a forest fire, flood, or storm is on the horizon, as well as in times of direct impact; you can watch our segment here.

Below are some thoughts on what small businesses can do when planning for and encountering a disaster.

Insurance

Business owners/leaders should ask themselves “when was the last time I had an in-depth conversation with my insurance broker?” and take the time to have this discussion.
Take note of areas where the business may have changed, such as renovations/new premises, equipment purchases/disposals, new/discontinued lines of business, and geographic regions of operations, as all of these may impact coverage needs.
Ask your insurance broker to explain any recent changes in your insurance policy, as well as new types of coverage that may be beneficial. Areas such as business continuity can be of particular interest.
Pay careful attention to coverage that relates to technology and cyber considerations, as these areas are of both increased risk and importance, given the need to work and access information remotely.
Discuss the steps that should be taken in the event that it is necessary to access assistance during a disaster and/or file a claim. It is helpful to have contact information on hand, as well as download any insurer apps.
Take photos and videos of the premises for documentation purposes, both before and after any damage occurs; this only takes a few minutes and can be done using a smartphone.
Be sure to get copies of detailed expenditure receipts, in the event of an evacuation or loss event; this is not the time to be part of the “no receipt crowd” or simply rely on a credit card statement.

Risk Management Planning

All businesses should have a formal, written plan as to what steps would be taken, in the event of a disaster. This should not only address the actions to be taken, but also who is responsible for doing so.
This type of plan should be updated at least annually and also reviewed with staff members, especially those who have a role to play.
Although the ability to continue to operate can vary with the type of business at hand, processes should be in place for staff members to be able to access information and work remotely, wherever possible. Achieving this requires much more effort than simply instructing staff to “work remotely”.
Ensure that key information is available remotely in the event of an emergency (and not simply stored in a binder at the office). Take special care with information that relates to areas such as banking (fobs, account numbers, key contacts, etc) and ensure that important contact information for suppliers, customers, staff members, and others is also close at hand.
Have communication plans in place that can be quickly distributed, for both internal and external stakeholders.

Now is a good time to have a fresh look at resources, such as your smartphone and any lists that are kept, to ensure that all of the key information that would be needed during a crisis is at hand. In terms of technology, useful resources include apps for banking, credit cards, insurers, credible news sources, community governments, weather, highways/transportation, and emergency management organizations. Be sure to sign up (and watch for) emergency alerts in your area and have charged power banks for technology devices. These might sound like basic reminders, but the best time to have them in place is well in advance of a crisis. Speaking from some experience, advance preparation helps to reduce the to do list in times of crisis, as nature tends to have its own plans.

Thank you for watching, and here’s hoping that all of our communities stay safe.

January 16, 2023 by Jenifer Bartman

MEDIA: CBC News Network Weekend Business Panel (January, 2023)

A new year, another appearance on the CBC News Network Weekend Business Panel; this time, alongside Dennis Mitchell, Christian Bravo, and Chris Glover, talking inflation rates, possible changes to mortgage guidelines, and business succession (of particular relevance for small business owners!). You can watch our segment here.

Some thoughts on our conversation.

The rate of inflation announced this week in the US indicates a continued decline over the past six months; what does this mean? It’s important to remember the need to step back and consider in context, as this allows trends to be identified, even if only on a preliminary basis. Although six months of inflation rate declines can be reasonably considered as a trend, it is important to recognize that the timeframe is short term in nature (less than one year), and that rates may vary slightly from month to month (real life isn’t always a straight line). Further, much of the most recent decline can be attributed to falling gas prices, so it will be important to monitor movement in this regard in the coming months.

Further, as the US is expected to reach its debt ceiling this week, it remains to be seen how Congress will address this issue in the coming months. Failure to raise the debt ceiling could result in confidence issues, which can lead to economic and financial risk. While business lives in the practical world of the direct impact of rising prices, a tight labour market, and ongoing supply chain challenges, politics can get lost in the theatre of partisanship, holdouts, and tradeoffs; stay tuned.

As interest rates continue to rise, Canada’s top banking regulator is considering tightening mortgage rules. Although it makes sense to manage risk in areas where households in situations of significant debt and mortgage amounts, a balance is needed to ensure that those who should reasonably qualify for a mortgage are able to do so. It is not helpful to create additional stress on the rental market, or to slow reasonable home sales in a manner that could also impact the construction market. Rules can sometimes have unintended consequences, so understanding the practical realities is important, prior to development and implementation.

And, finally, a recent (and familiar) report from the Canadian Federation of Independent Business indicates that 76% of owners plan to exit their businesses within 10 years. As a business advisor and author of Defusing the Family Business Time Bomb, this headline is not surprising, as reports over the last decade or more have had similar findings. A few things to think about on this topic of critical importance to business owners and Canada’s economy:

Unless a business leader has bought and sold several companies, they tend to have little experience in the areas of succession and transition.
These studies tend to find that only a small percentage (in the single digits) have a formal, written succession plan. While some have an “informal plan”, the majority of business owners tend to indicate that they do not have a succession plan.
For numerous reasons, succession planning should commence years in advance of the time of transition (a minimum of three to five years) and it is critical to demonstrate a track record of “good to great” financial performance (over years, not months). Keep in mind that companies that are able to generate a strong exit value (i.e., sales price) have a track record well in excess of the norm.
Qualified successors/acquirers with the necessary capital to undertake a transaction are limited, which makes business succession competitive. This is something that business owners tend to underestimate.

Advisors can help, and the sooner that business owners put a priority on succession planning, the better (a new year is a great time to start). Thanks for watching, and see you again soon.

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November 14, 2022 by Jenifer Bartman

MEDIA: CBC News Network Weekend Business Panel (November, 2022)

Another busy week on the CBC News Network Weekend Business Panel, alongside Jeanhy Shim and John Northcott, talking layoffs at Meta, the collapse of crypto platform FTX, increasing financial strain, and more; watch our segment here.

Some thoughts on our conversation.

Although businesses with emerging ideas can be exciting places to be, one of the challenges is that the plan to make these ideas a reality is not always as well developed as it should be. When opportunity appears, growth companies have a tendency to put resources to work first, which could include hiring people without fully understanding the necessary roles, skillset, and quantity, as well as allocating funds to a range of areas. Before long, a lot of money could be spent, and without sound project management, these initiatives tend to drift and may not fulfill what was initially envisioned; they can also run well behind expected timelines. A company’s core business can also suffer, while focus and resources are allocated elsewhere, resulting in problems in various areas. These situations can “snowball” and become quite significant,

Some might think that this scenario would primarily occur in smaller businesses, however, this can happen in any size of company, where growth gets ahead of good planning (analogous to the cart before the horse). The Meta layoffs raise the question of how well the “metaverse” plan was established, resourced, and managed, and also brings to mind the importance of market timing, in terms of the extent to which consumers are ready for what companies develop or are planning to bring to the marketplace.

The FTX collapse is a reminder that the crypto sector is one of high risk and brings to mind the pitfall of thinking that all companies associated with a novel business category are “winners” (examples of this were also seen in industries such as technology and the internet). High risk businesses include those that have a limited track record, weaknesses in areas such as governance and oversight, and thin business models; they also tend to have people in leadership roles with limited experience. This story is a reminder to keep risk considerations in check, especially in those “seems too good to be true” situations.

And, finally, as inflation rates remain high and interest rates continue to rise, there is no doubt that Canadians are feeling the stress of the situation. Over the past couple of years, a drive around many communities is all that was needed to recognize empty office spaces and companies that were no longer in business; this includes job losses. Despite a tight labour market, moving one displaced employee to a vacant job is not always feasible, making solvency difficult for some Canadians. It is important to recognize that, like COVID, our economy may not reach brighter days for a while, despite our best hopes. This is an important area to continue to monitor, for consumers and businesses alike.

It was a pleasure to join this week’s Business Panel from beautiful Nova Scotia! Thank you for watching and see you again soon.

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October 27, 2021 by Jenifer Bartman

MEDIA: Business Building a Key Part of Innovation (The Hill Times Op Ed)

This Op Ed was published by The Hill Times on October 25, 2021, in conjunction with its Innovation Policy Briefing.

Innovation tends to be viewed as something that is associated with labs, microscopes, and other technical spaces, and although it might start here, this is not where it ends. Products of invention that are viable in the marketplace do not get to customers on their own; rather, there is a need to develop this important connection point, which often involves building a business.

There is a common misconception that the “invention” phase of innovation is the hard part, and although it is far from easy, the “build a business” component can be equally, if not more, difficult. It is at this point where the potential of what has been developed thus far can be stopped in its tracks, with novel products failing to reach the marketplace and generate a revenue stream. This situation represents a dual loss, as the innovation does not get the opportunity to benefit whoever it was designed to help, and there is little in the way of financial returns to offset the investment that was made during the research stage. Unfortunately, this is the fate of many “bright ideas”, often because the business aspect has been underestimated, underfunded, or not prioritized.

Building innovation-based companies that are robust and sustainable represents an opportunity to create a foundation for further development, a cycle that is well positioned to generate ongoing economic wealth. This challenging task is too often left to those with primarily technical backgrounds, lacking formal business education and experience. Although technical founders certainly have relevant skills and experience to contribute (product and business development are good examples), leading and growing a company requires a different skillset, with a depth of experience in areas such as management, finance, raising capital, and scaling early-stage companies. In other words, this complex task, which tends to unfold in the uncertainty of emerging markets, requires a collaborative range of competencies in order to achieve success.

Equally important is ensuring that sufficient resources are allocated to the business-oriented areas of the company, such as finance, sales, human resources, compliance, and administration, as the technical (or product) function tends to already be well established. Access to adequate levels of “smart money”, including venture capital and growth-oriented financing, is integral to the process, as companies tend to be financially challenged when they are on the brink of achieving significant milestones. Having emerged from the early days of small fundraises and research or business start grants, young companies that have attracted customers and opportunities to generate larger revenue streams too often find themselves with an insufficient capital base, with many simply unable to get past this stage.

Although Canada has a growing venture capital industry, it is much smaller than the US, when considered on a pro rata basis (For 2019 venture capital investment, Pitchbook reported $136.5 billion in the US, while the Canadian Venture Capital & Private Equity Association reported $6.2 billion, approximately one-half of the 10% measure typically used for comparison to the US market, prior to including foreign exchange). Raising money can be extremely difficult, and although not all businesses are worthy of investment, many promising companies are left unfunded; those that are led by women or minorities face even greater challenges. Businesses that are successful in raising capital and generating significant growth tend to encounter limits in the level of investment that can be raised, with a need to look beyond Canada’s borders or relocate elsewhere. It is difficult to find Canadian innovation-based companies with a dominant global presence, as compared to those such as Google, Amazon, or Apple, representing a missed opportunity to bring Canadian technologies to the world and build significant wealth here.

Canada’s innovation strategy would benefit from a greater emphasis on the commercialization stage, with a specific focus on building a business around commercially viable intellectual property, to create capacity, distribution, and a revenue stream. Sufficient growth capital and targeted business advice are required in order to achieve this on a sustainable basis, resisting the temptation to cycle back to the invention stage, in terms of funding and attention. The road to opportunity is ahead, and it requires a greater degree of practical input and engagement from experienced business minds in order to reach its full potential.

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September 28, 2020 by Jenifer Bartman

MEDIA: When the Stores Come to You (Winnipeg Free Press)

There’s no doubt that COVID19 has impacted the way that we live, be it what we do (less), where we go (not far), and perhaps, most apparent, how we do things (differently). Although there’s been a shift in how consumers procure goods and services that has been evolving for some time, the days of COVID19 have left many looking for solutions, some of which are not entirely new.

Consider shopping. The rise of companies like Amazon and improved online shopping and delivery services from a range of retailers have changed how consumers interact with the retail experience. We’ve come a long way from the nostalgic home delivery services of mid-last century, evolving through a time where mobility was all the rage (think malls, super malls, and the ultimate retail lifestyle experience) to arrive at a period when convenience is perhaps the most important consumer driver, closely followed by selection. Online and mobile technologies have made a lot of this possible, but improvements in the area of logistics might be an even more important piece, something that is still very much in progress.

Fast forward to a range of upstart companies seeking their space in this lucrative market; fueled by the gig economy of those who have capacity to sell, as we’ve seen in areas such as ride sharing and short term home rentals. I discussed one of these shopping/errand companies in a recent interview, where consumers can receive groceries and other items from various stores in their area, delivered in one convenient order

Although these services might bring important convenience in times of COVID19, will they last? The impact of demographics might allow at least some of these companies to survive into the future, with evident trends including aging Baby Boomers, older seniors living in their homes for longer, and some geographic areas where the availability of younger family members to help is limited.

Market opportunity, however, is only one side of the equation; consider the following keys to success:

Capacity. Delivery companies are only in business if they can attract and retain a sufficient number of drivers/contractors to provide services. In a competitive world with a limited pool of potential “gig” contractors, which companies will be in the best position to attract them? As a side note, beware of the potential for these workers to be deemed as employees for income tax and other purposes, which could represent a costly impact and need for business model revision.
Know the market/area where success is possible. As this type of service offering is local, the geographic area must be sufficient to draw contractors, customers, and be competitive. Those who do the math will realize that this isn’t so easy, especially on a sustainable basis.
Implementation. Some might say that the devil is in the details; those who have been business operators know that the devil is in implementation. Young companies can plan their service offering, but success is only realized by way of strong implementation on a sustainable basis, and with this type of logistical, “transaction heavy” business that utilizes a casual workforce, lots can go wrong.
Keeping up with the future. Recognize that these companies will have to evolve in order to be sustainable, in areas such as enhanced logistics (think autonomous vehicles) and providing a competitive offering, where customers see value over the service cost. This includes understanding costs, down to the last detail, as well managed and better capitalized companies will be in a stronger position to compete over the long term.

There’s no doubt that we will continue to see changes in how we live, including over what is expected to be another challenging season of COVID19 into the Fall and Winter. Companies considering their next steps would benefit from the advice of those who have experience in building and managing businesses; it’s an advantage to have strength in your corner.

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May 20, 2020 by Jenifer Bartman

Staring it Down: The Family Business Time Bomb Meets COVID-19

Blog Post published by Evelyn Jacks of Knowledge Bureau

We couldn’t have predicted the devastating economic effects of the pandemic on small businesses when we wrote the book, Defusing the Family Business Time Bomb. But if there was ever a time for families to address the issue of what to do next in guiding their business out of stormy waters, it’s now. This is the book to help you and your clients through it. Here’s how my co-author, Jenifer Bartman describes the opportunity:

“Remember all of those times when you thought (or your clients thought) that something that happens on the other side of the world can’t impact your company? The current COVID-19 crisis is a case in point that demonstrates that the exact opposite is true. While business leaders are challenged to manage their companies, determine if they qualify for relief programs, or simply survive, many are likely realizing that their systems, processes, and financial information need to be much stronger. Strategies to implement now and carry into the future are in demand and Defusing the Family Business Time Bomb was written to stare down challenges and win, even when we can’t always predict what the specific circumstances might be.”

It is clear the critical questions have intensified. What should owner-managers do now with the family business, mid-pandemic, and at a time when boomers are contemplating retirement? Will the business sell for the millions owners hope for, limp into bankruptcy, or just wind down? Worse still, will family relationships survive it all?

The answer lies in the family’s ability to embrace these unprecedented changes to re-imagine the purpose of the business beyond the pandemic, and then to drive that renewed purpose to build and transition a scalable company that has value beyond the original owner.

But at the same time, it is important to focus on the family relationships that will either suffer or thrive along the way. The reason? Even more damaging than the economic fallout of the pandemic is that the most promising and profitable company could perish when the investment in the family business is marred by family conflict.

While it is normal for a typical family business to be inundated with challenge and change, we all know these are not normal times. Never have so many potential threats been evident at the same time:

The disruption of the pandemic: While some “re-imagined” companies will enjoy a successful rebirth in these times, many may not survive. It is critical that a Real Wealth Management™ team of specialists be engaged to do a 360-degree analysis of the short and long term “what if” factors. The family needs to understand tax, legal and financial circumstances and plan proactively to get through them.
Demographic factors: aging Baby Boomer owners have a limited number of potential successors, and now a shorter runway to revamp valuations within the tepid economic growth cycle they find themselves in.
Disruption of key industries: new and complex business models require a rapid pivot. It’s all virtual all the time, and like the internet and computer revolution before that, working from home and conducting Zoom meetings will not fade away. This is the mainstream way to conduct business and it is here to stay. The unprecedented speed that digital/technological advancement has been forced upon the globe requires an enormous rebuild for many businesses. This could reduce expected valuations and make transition to new owners either irrelevant or much more costly.
Dramatic change in the global economy: There is no doubt that the recession Canada now finds itself in is making strategic planning more In good times, the big worry is the escalation of the cost of doing business and shrinking profit margins. In these bad times, the enemy is the absence of revenue. It requires the remaking and repositioning of the value of the company in completely new pursuit, as forecasts will likely be more important than historical trends. Astute professional help from experienced accounting and business valuation specialists can save exit expectations.
Uncertain tax rules: There is no doubt that the complex new tax changes, restrictions to family income sprinkling, and a new clawback of the small business deduction all impact profitability, investment opportunities, and access to capital. This challenge could be especially difficult for young entrepreneurs or successors who want to scale up the business for the future. However, the various wage and rent subsidy programs have been complex. They have tax implications and more importantly, bring with them a higher probability of tax audit risk in multiple departments: GST/HST, payroll and personal/corporate income tax.
Typical family business problems: conflict, apathy, sudden or emerging illness, or control issues can affect relationships, decision-making, and ultimately the health of both entities: the family and the company. Exhausted business owners who have been working overtime just to hang on and meet their obligations are likely not endearing themselves to the families that resent their efforts to save the business.

Whether you or your clients are long-time business owners getting ready to transition out, or a sudden new entrant to the “gig economy” due to pandemic-induced unemployment, the good news is that you are likely poised to grow and expand, once the dust settles. You will appreciate this book for its contemporary and practical advice on how to get the next phase write, from the ground floor up.

It brings a common-sense approach to the challenges associated with building a company that has the potential to be sold to someone else in the future, despite the current crisis.

I know I speak with my co-author, Jenifer as I say this: we wrote Defusing the Family Business Time Bomb to help prepare for the most explosive challenge in a generation. Specifically, the retirement of the Baby Boomers and transition of their companies to a new guard, who face pitfalls and opportunities of their own, most especially now. We hope you will order it, gift it to your business owner friends and clients, and start numerous new discussions about the bright economic future ahead, once we get past these storm clouds.

Jenifer Bartman, CPA, CA, CMC, MFA™, is the Founder and Principal of Jenifer Bartman Business Advisory Services, assisting companies in transition (early, financing, growth, and succession stages) with growth strategies, financing readiness, strategic/business planning, and executive coaching. Jenifer is well known for her venture capital and early stage financing expertise, having been an executive in the industry and an advisor to many young companies. She appears on the CBC News Network Weekend Business Panel. She tweets @JeniferInc.

Evelyn Jacks, MFA™, DFA-Tax Services Specialist™, is one of Canada’s most prolific financial authors, having penned over 50 books on personal tax and family wealth management, many of them bestsellers. A well-known tax and financial commentator, she has twice been named one of Canada’s Top 25 Women of Influence. Evelyn is also President of Knowledge Bureau, a national educational institute focused on professional development of tax and financial advisors. Follow her on twitter @evelynjacks, and here in Knowledge Bureau Report.

Copies may be reserved online, or by calling 1.866.953.4769.

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August 19, 2019 by Jenifer Bartman

Giving up on the 1-Yard Line: Finding triumph over mistakes that companies make

This article was published by CMC Canada in the Summer 2019 issue of Consult.

In my many years as a business advisor and venture capitalist, I have seen companies make a lot of mistakes. There have certainly been successes, but mistakes, unfortunately, are a lot more common. Some of the ones that are the most damaging are those that are analogous to “giving up on the 1-yard line”, where after a prolonged period of time of working, pushing forward, and focusing on their game, a company’s leadership throws up its collective hands and says, “I’m done”. Why is this so harmful?

First, this situation tends to occur when facing challenging tasks that are integral to the success of a company; examples include areas such as properly conducted business planning, implementation of fundamental systems and processes, and successfully attracting financial and strategic partners. Appropriately addressing these areas tends to take far more work than business leaders anticipate; they also represent initiatives that might be entirely new. As a result, the keen enthusiasm that is apparent when a project begins tends to fade to an attitude of “we don’t need to work this hard”.

Second, companies sometimes have difficulty focusing on priorities, as key areas tend to be far less glamorous that the “fun” aspects of being in business, such as designing a new logo, touring office space options, or chatting up prospective partners that the company has little potential of actually attracting. Days get filled with these activities, that are more about busy-ness and less about results, decreasing the amount of available time to focus on the real work that needs to get done. This is a hard lesson that business leaders tend to discover far too late, and can be as damaging as losing key customers or running out of money. Full stop.

A better approach is recognizing that advisors who have “been there” and “done that” are in a unique position to provide the important leverage that companies need, to ensure that they are focusing on the right things, conducting their work at a quality level, and not running out of steam. How can this be achieved?

Priorities are not always obvious. Amazing, but true. Business leaders can get so caught up in the challenges of running the company on a day-to-day basis, dealing with staff members, and responding to customer needs that they are unsure (or unaware) about the steps that should be taken to make meaningful progress on a corporate level and might lack the experience of what is required in order to do so. Advisors can play a key role by identifying and prioritizing task items and keeping the implementation process on track. All of these areas are common pitfalls and represent the difference between starting something and actually getting it done (activity does not equate to meaningful progress).
Experienced advisors are the “acid test”. Advisors with a strong experience and qualification base understand where important initiatives need to “get to”, such as what financial partners need to know in order to make a decision. Companies tend to take the view that “what we provide to them will be good enough”, failing to understand the woeful inadequacy of this approach. Using raising capital or financing as an example, experienced financial partners have typically reviewed more opportunities than they can count and operate in an environment of limited money and an investment mandate that guides selection. They very quickly slot opportunities into a category, and chances are, it won’t be the “yes” file. Experienced advisors have a skillset that is extremely valuable; one that can help a company put its best foot forward and anticipate what is required in order to get to a successful outcome. Be sure to probe an advisor’s qualifications to ensure that they are the right fit for the particular initiative at hand.
Utilize skill to get there, faster and better. Teams who spend the whole game running around on the field, for the sake of running around, don’t win very many games. Coaches of successful teams know how and when to utilize resources in a manner where they can make the best contribution, including recognizing that there are times when specialized help is needed. This is where an experienced advisor can play an important role, providing the necessary expertise to quarterback complicated plays and get to the endzone more quickly. Business leaders sometimes do not appreciate the value of resources with the right experience; this fact tends to get reinforced in times of poor advice, from those who are not qualified to help, or when receiving no assistance at all. A company might not recognize the weaknesses that result, but the external party that they are trying to impress likely does.

These lessons might seem relatively straightforward, but reality reflects something quite different, as fumbles and mishaps in all of these areas, and numerous others, are quite common. What can make a big difference is perspective; stepping back to see how far an initiative has come, the relatively short journey that remains, its level of priority, and what success requires. If business leaders did this more often, there would be far fewer companies walking off the field with only one yard left to go.

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March 28, 2019 by Jenifer Bartman

MEDIA: Appearance on Moolala (Sirius XM)

Pleased to appear on Moolala (Sirius XM radio), joining host Bruce Sellery to talk about my new book, Defusing the Family Business Time Bomb. You can listen to our chat here.

This discussion is a great reminder that what’s good for companies in general is also good for family businesses! Too often, family businesses tend to have the view that catering to what’s best or most convenient for the family is an acceptable priority (and sometimes, the main priority!). In our highly competitive, rapidly evolving, technology fueled world, this approach can be particularly dangerous. Consider the following realities:

Consumers favour flexibility and convenience, in terms of how they procure goods and services. With a world of options at their fingertips, consumers have never had more choices, and companies that do not perform well or fail to meet expectations are quickly replaced by more savvy competitors. Getting a customer back once they have been lost is difficult, if not impossible, in many cases.
An abundance of things that used to be done “manually” are now driven by technology, think shopping, logistics, communications, manufacturing, and even depositing a cheque. Companies who have not kept up with the technologies that impact their industry or have failed to invest in these areas are unlikely to have a future (they barely have a “present”). Family business leaders who consider succession to be as simple as handing over the keys to the next generation need to think again.
A well managed company leads to good outcomes, including financial performance, customer loyalty, and longterm employees; these are some of the building blocks of establishing a brand. When a company is guided by what is most convenient for itself, shuns the systems and processes that generate good performance, and fails to seek advice to bring valuable perspective and expertise, it is not in a position to establish a brand presence that represents meaningful value to a potential successor or acquirer down the road.

Think about what this means. When family businesses fail to operate in a manner that is based on fundamental business practices and the needs of the marketplace, they put the future of everyone involved at risk; this reality has never been more true. Business leaders must take action, now, to ensure viability over the longterm, to the benefit of the company and the family (and those in the Baby Boomer generation, who have led companies for a while and are now facing retirement are a particularly important group, when it comes to succession considerations).

Get started by reading Defusing the Family Business Time Bomb, helping business leaders face the most explosive challenge in a generation. Your business and your family’s wealth generation should have a future, right?

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March 25, 2019 by Jenifer Bartman

A World Away from Yesterday

This article was published by CMC Canada.

There was a time when it was a given that a family business would be passed from one generation to the next; in many cases, it was just a matter of time. Over the course of 20 or 30 years in business, things changed, but not at the pace or in the manner that has been the case over the past few years.

We have certainly seen the impact of demographics and technological disruption on business succession, but there’s also considerations that relate to changes in the global economy and the financial uncertainty that continues to evolve. Consider the following factors, in terms of their impact on both the current operations and future viability of family businesses:

Trade relations. Recent years have brought numerous trade developments, including tariffs, disputes, and negotiation of new agreements, such as the USMCA (to replace NAFTA). This agreement not only includes new clauses, it has also created uncertainty, given the lengthy negotiation timeframe and the fact that it is yet to be formally enacted. In addition, ongoing trade discussions between the US and China and the friction associated with the detainment of a Huawei executive have left many countries wondering what the outcome will be, along with uncertainty associated with Brexit, the European Union, and turmoil in Venezuela. This state of flux impacts critical areas such as business investment and growth strategies, as well as financial performance, when unexpected tariffs and trade bans come into play (the case of Canadian canola imports being halted by China is a recent example).

Ally uncertainty. For those of us who have been on this Earth for a while, there has been relative consistency in terms of who are considered to be global allies and those who are foes to be regarded with caution. In challenging times, it has been a given that countries such as Canada and the United States would work together with allies in Europe and the rest of the Commonwealth to protect interests and combat potential harm. In recent years, traditional alliances have become less certain, with US leadership effectively reducing its global profile and “making nice” with questionable regimes. Besides the obvious “headline” appeal, the reality is that economic circumstances tend to follow relationships, and when uncertainty occurs, it could translate into business risks, and sometimes, opportunities, if the situation is approached effectively. Regardless, companies are impacted by these developments, even if they occur in faraway places (think about the realities faced by farmers and everyone who counts them as customers, when Canadian canola shipments are turned away by China).

Financial matters. In addition to how trade, alliance, and global economic factors could impact a company, there are also matters closer to home that contribute to changing times. Consider areas such as increasing interest rates, changes in tax legislation, and the challenges associated with access to capital. Canadian businesses have seen significant tax changes in recent years, some proposed, some enacted. In addition to the real life implications, business leaders have had to seek specialized advice to understand areas such as income splitting and potential clawback of the small business deduction. Potential successors are challenged to procure the necessary capital in order to undertake a business transaction, in an investment and financing environment that has become increasingly competitive and complex, as financial partners also monitor global developments.

The bottom line is that a company must have the ability to demonstrate marketplace relevance well into the future; in the absence of doing so, there is no basis to achieve ongoing successful operations, making transition irrelevant. Leaders of tomorrow must be able to demonstrate a viable business model, strategy, and plan to make their time at the helm worthwhile, but also to secure the necessary capital to complete a succession transaction. Current and future family business leaders can (and should) take action now by reading Defusing the Family Business Time Bomb. A world of opportunity (and risk) awaits!

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February 19, 2019 by Jenifer Bartman

At the Speed of Fright (I Mean, Light)

This article was published by CMC Canada.

The pace at which our world is evolving is one of those things that has become so common, we don’t always take the time to think about its impact. Phones that are used to watch broadcast media, cars that don’t need gas or a driver to operate, personal “assistants” that can place orders on command, rockets that can essentially land themselves, mapping applications that make logistics a snap; these are phenomenal developments. While these technologies and many others have made our lives easier, they have also presented significant challenges to the business community. Consider the following:

Business model blow up. The manner in which companies make money has changed dramatically in many cases, which cuts to the very heart of business; this is easily illustrated by the retail industry. While stores used to be the primary shopping option, consumers now have access to a range of methods, including online, rapid delivery, subscription models, and mass media e-tailers. Consumers have, in fact, come to demand these options, leaving companies to struggle to meet the pace of change, with many finding themselves in a too little, too late situation, unable to survive. This disruption scenario is true in almost any industry.
Strategy break down. In order to migrate a company through significant change, a key requirement is having a strategy that is proactive, comprehensive, and relevant. These attributes are driven by having a thorough and timely understanding of the changes that are occurring in the external environment, including industry trends, technologies, and marketplace developments. Too often, business leaders focus primarily on what’s occurring inside of their company, with a “they need us” mentality when it comes to customers. This mindset is one that greatly jeopardizes the future of a company.
Resource reckoning. New business models utilize resources differently; examples include the need for fewer people, different skillsets, roles that are held by technology, and utilizing strategic partnerships. Each of these bring changes in workflow design, systems, processes, and costs (remember that costs directly impact pricing!). Companies that do not proactively pursue the need to change how they work tend to get left behind at the worst of times, when more savvy competitors have implemented these methods, making it impossible for others to catch up and compete; which leads to this last point.
Financial shortfall. Integral to a successful business is the ability to generate at least good financial performance (strong results are, of course, better), thereby creating the fuel to invest, grow, and sustain over the long term. When a company does not have the right business model, it isn’t in a position to build the appropriate strategies to utilize resources well and be competitive over the long term, which leads to poor financial results; it’s all connected. Companies in this situation lack market relevance and are, too often, left without a future. Think about what this means to a business leader who is depending on the transition of their company to someone else, as the basis to fund their retirement.

The reality is that many of the advancements that we live with today represent technologies that much of society could not have imagined even five years ago. What will the next five years bring? The next 10 years? As technological advancement continues to accelerate, even the next two to three years will be highly significant. Is your company ready to face this challenge?

Remember that challenge also brings opportunity, but only for those who are well positioned to approach it. Learn more about the profound impact of disruption in the external environment, as well as how to take control and benefit from it by reading Defusing the Family Business Time Bomb. The future of any company is based on its ability to continue to be relevant to the marketplace over the long term. In today’s world, this is anything but a given.

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